Daily Fundamental ForexTime ( FXTM )

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Thu Dec 01, 2016 10:39 am

by FXTM Official

Forextime.com Daily Market Analysis

OPEC is back, who else wants to join the party?

On Wednesday OPEC defied sceptics by telling the world we’re still united. When many thought that OPEC had no more influence on oil prices, yesterday proved them wrong with Brent prices surging by 9% to trade above $50. For the first time since 2008 the cartel members managed to put their political conflicts aside and strike a deal that benefits their economic agenda by reducing output 1.2 million barrels a day starting January 2017 for six months.

Russia also said it will come on board and cut output by up to 300,000 barrels per day in H1 2017, and still to be seen whether other countries will join when OPEC and non-OPEC producers meet on December 9 in Doha.

Energy stocks around the world are enjoying one of their best days in many years with S&P/ASX and Topix energy indices up by more than 7% and U.S. S&P500 energy index closing 5% higher yesterday.

Will prices continue to move higher?

If you were long oil early Wednesday, then you’ve received your Christmas gift already, but whether prices will continue to surge higher depends on multiple factors.

• Which countries other than non-OPEC Russia will commit to a cut?

• Will the process be monitored effectively, or chances of prisoner’s dilemma that encourages some members to exceed their production quota come into play?

• Will U.S. drillers return fast if prices held above $50 and how many rigs will be reactivated?

• On the demand side, are we going to see higher revisions due to Trump’s infrastructure policies?

If oil prices traded in the range of $50-$60, shale isn’t likely to return in massive levels, however if prices spiked above $60 then the shale industry will return as a major player to rebalance prices. The bottom line is OPEC’s deal will put floor on the downside, but on the upside multiple factors should be taken into consideration.

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By Hussein Sayed, Chief Market Strategist (Gulf & MENA)

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Mon Dec 05, 2016 8:24 am

by FXTM Official

Forextime.com Daily Market Analysis

Italy continues to dominate headlines as Euro hits 20-month low

Political risk is showing no signs of escaping the headlines after the European Union was plagued into fresh political turmoil overnight following confirmation that Italian Prime Minister Matteo Renzi suffered a humiliating defeat in the referendum over constitutional reforms, which will lead to the handing of his official resignation to the President of Italy later today.

While political change in Italy is not something that the world is immune towards, there is anxiety that this round of political instability will rock economic confidence and negatively impact the Italian banking industry that is considered to be a danger spot for the Eurozone. It is no hidden secret that the Italian banking industry is plagued with bad debt and it is widely conceived that the Italian Government does not have the money to support the troubled banks, which could run the risk of eventually leading to an EU bailout similarly to what we have seen happen elsewhere in the past.

The market reaction to the events in Italy have not been disastrous, but it has attributed to the negative trading environment to commence the week in Asia and there are concerns over how financial stocks could react when the markets in Europe open in a couple of hours. The Euro has as expected been the major loser to the events in Italy, with the Eurodollar sinking to a fresh 20-month low marginally above 1.05 early on Monday morning.

There is no hiding away from the fact that this represents another victory for the anti-establishment with this also wrapping up events in 2016 that have included unpredictable upsets in both the United Kingdom and the United States. The concern is that the constitutional referendum in Italy was originally seen as a measure to speed up reforms in Italy for the greater good, but it was later turned towards an opportunity for voters to display their unrest with the current economic situation in the country and dissatisfaction towards the Italian government.

When you consider that there are major elections in both France and Germany in 2017, investors will be unable to ignore that there will be further political risks to come next year and that the surprises seen in 2016 could be viewed as a warning shot as we head into the new trading year. The elections scheduled for 2017 represent major event risks and following the political upsets that have caught investors by surprise throughout 2016, the upcoming elections in both France and later Germany provide a reason why many believe that the Euro could head for additional declines over the medium and longer-term.

Pound awaits Supreme Court hearing

While the British Pound is still enjoying a bounce following the comments that it might be possible to purchase access into the single-EU market once the United Kingdom finally leaves the European Union, there is a risk that the currency could begin retracing its gains once the Supreme Court begins a landmark hearing later on Monday on whether Parliaments consent is required before official negotiations can begin on the United Kingdom leaving the EU.

The hearing of 11 different justices is supposed to last four days and while the official outcome is not expected to be announced until 2017, any hint that Prime Minister Theresa May might be able to invoke Article 50 as previously planned for around March 2017 will encourage selling opportunities in the Cable.

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By Jameel Ahmad, VP of Corporate Development & Chief Market Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Investors are getting used to bad news, and the lessons learnt in the past couple of months were implemented on Monday after the Italian referendum results. It’s true that a “No” vote was priced in to some extent, but the heavy defeat with 60% lead for those who rejected the reform of the constitution suggests that anti-establishment populists in Italy are on the rise. Although the Five Star Movement may be pushed away until the spring of 2018, there are many uncertainties ahead especially for Italy’s financial system.

The Brexit vote took a couple of days to be shrugged off, and Trump's electoral victory shock lasted only a few hours before bulls took control of the market, so why not respond in a similar way to Italy’s referendum? The EURUSD fell more than 150 pips in the immediate aftermath of the vote result testing 1.0503, and in less than 24 hours the pair surged by 290 pips. We can have a list of reasons to justify the price action, such as buy the rumours sell the news, Italy’s referendum vote doesn’t mean Brexit, or short squeeze occurred, but the most obvious fact is that markets are acting in such a weird way, where bad news is received with open arms, and this trend may not last too long.

Reserve bank of Australia held its final meeting for the year, and as expected kept rates at a record low of 1.5% after reducing them by 50 basis points in 2016. Very little changes were seen in the statement too, indicating that the central bank is in watch and see mode, and the Australian dollar reaction was mild, moving in a 40-pip range against the U.S. dollar. Traders should keep an eye on tomorrow’s GDP release where the Australian economy is expected to contract for the first time in 5 years.

The key central bank meeting for the week is Thursday’s ECB meeting. The €80 billion asset purchase program will end in March 2017 and the key question is going to be whether the Central Bank will continue buying bonds at the same pace or reduce the amount in a similar tactic to the U.S. Fed, which started reducing its monthly purchases by $10 billion in December 2013. Italy’s no vote will undoubtedly be discussed; however, any sort of bailout will create political chaos, but it remains to be seen whether it will indirectly impact the ECB’s decision.

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By Hussein Sayed, Chief Market Strategist (Gulf & MENA)

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Wed Dec 07, 2016 2:45 am

by FXTM Official

Forextime.com Daily Market Analysis

CAD claws back ground

The Canadian dollar has finally managed to gain some ground against the strong USD after weeks of the market waiting for it to react to oil prices beginning to show some turn after the recent OPEC agreements. However, Ivey PMI data out today showed weakness in the Canadian economy was still apparent as it came in at 56.8 (60.0 exp) showing that despite the optimism in Canada there is still weakness in the economy and the fact it was slightly down on last month will be concerning. For the most part the Canadian economy will benefit greatly if oil prices continue to remain high in the wake of the recent OPEC meeting. What will be key for the Canadian Dollar will be how non-OPEC members such as Russia react to the agreement. There is still a degree of hesitation around dealing with Russian and its needs to pump as much as possible to sustain the deficits it currently runs.

On the charts the USDCAD has broken through a number of key support levels as it slips down the charts in a bearish motion. The largest being the 1.3402 level which managed to hold out for a few days before the market pushed through on the back of oil prices. Currently though the 1.3267 support level is holding up further drops on the charts and the 50 day moving average is acting as dynamic resistance on the chart. This is likely to cause the bulls a little hesitation and they may look to play of key levels rather than focus on turning the trend at this stage. When looking further ahead I would expect the bears to look to play to lower levels at 1.3149 before pausing and looking for further oil movements which may indicate direction for the USDCAD.

Silver has been an enigma as of late as it has bucked the trends and dived lower in a tough market for commodities. For the most part it has looked to follow the market and indeed climb higher as commodity prices have improved in the long term, relatively speaking though silver is very much a precious metal and traders have been pushing it around as a hedge for market sentiment. Despite all of this silver has so far struggled as well with a higher USD which has pushed the metal lower and into the $16 dollar range where it has not been since June.

Silver on the charts has been a technical traders dream as of late as it plays of psychological levels and moving averages very clearly. So far it has held up on support at 16.708 but this looks unlikely to hold in the short term as the market continues to look bearish with the incoming Trump presidency. The 20 day moving average has acted also as a level of dynamic resistance in the market place, and is likely to hold back further movements unless we see drastic change. The next level of support down is at 15.933 and I expect this will be a tough one for the market to crack.

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By Alex Gurr, Guest Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Wed Dec 07, 2016 10:20 am

by FXTM Official

Forextime.com Daily Market Analysis

WTI bears on the prowl

WTI Crude was vulnerable to sharp losses on Tuesday following reports of OPEC’s output rising to a worrying record high of 34.19 million barrels per day in November which revived the oversupply concerns. It is becoming quite clear that the effects of last week’s expectation-defying production cut deal in Vienna is warring off as investors come to terms with the painful OPEC reality. For the cartel to bring production back down to the optimistic 32.5 mbpd in January after November’s high, a mammoth 1.7 million barrels will have to be trimmed which could be challenging. When keeping in mind countries such as Libya and Nigeria that are exempted from the limits of the latest agreement amid the record high outputs, concerns may mount over OPEC failing to fulfil the agreed production cut next year. There are still many unanswered questions and patches of uncertainty over how the cartel may solve this complicated production cut jigsaw consequently pressuring oil further.

Much attention may be directed towards the OPEC and Non-OPEC meeting on the 10th of December which could spark a selloff in oil if non-OPEC refuses to cut production by 600,000 barrels per day. Russia’s oil production continues to hit fresh post-Soviet highs while Russian officials have repeatedly stated that output cuts will be implemented moderately which could impact the pending deal. If pessimism persists over the production cuts and oversupply fears intensify then WTI bears could install another heavy round of selling. From a technical standpoint, bearish investors could exploit the breakdown below $50 to encourage a decline lower towards $48.50.

Sterling bears make a comeback

Sterling relinquished short term gains on Tuesday with the GBPUSD sinking towards 1.265 after reports of the British government requesting parliament to honour its plan to divorce the European Union renewed the Brexit fears. The main theme driving the Sterling this year has been the ongoing Brexit saga with uncertainty and fears over the longer term impacts of Brexit to the UK economy diminishing investor attraction towards the currency. While bulls may be applauded on their ability to exploit the noise and optimism over Brexit being delayed to propel Sterling higher, the technical bounce should act as a firm foundation for sellers to drag prices lower. Investors may direct their attention towards the UK Manufacturing Production report which if exceeds expectations could provide bulls a slight lifeline. Although data from the UK continues to repeatedly display signs of economic stability, it has become clear that Brexit remains the main theme that has made Sterling sellers’ dream in the medium to longer term.

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By Lukman Otunuga, Research Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Thu Dec 08, 2016 3:02 am

by FXTM Official

Forextime.com Daily Market Analysis

US equities jump sharply

US markets saw a massive rise today as the Dow was up 300 points and the S&P 500 was up 29 points showcasing that investors believe the advent of Trump will have a positive effect on the US economy. This result while being based around the politics was further backed by the strong results the US market has been seeing with JOTLS job openings up to 5.53M - a reversal on a drop in the last 2 months. However this may also be a seasonal shift with many jobs created around the busy Christmas shopping season. Consumer credit was also much lower at 16.0B (18.8B exp) after two very large previous months where consumer credit saw large growth. For the most part though the US economy looks poised to make the most of the Christmas season and many are expecting trump to take the US economy that one step further in the New Year. It could be a hard landing for markets if he fails to deliver, but for now the market optimism seems ever increasing.

On the charts the S&P 500 has certainly reached higher and the market is looking for a solid resistance level to pause at and take profit. In the past, resistance levels in uncharted territory tend to happen around key psychological levels and in this case 2250 looks likely to be the hard line that will be tough to cross for the bulls. Beyond this the obvious next level above will likely be at 2300 and I would expect the market to take a breather until Trump looks to swing his economic might to help bolster the US economy. Any push lower to support is likely to find it though at 2183 or alternatively dynamic support on the 20 day moving average, which has been quick to push back any bearish activity as of late.

Across the pacific in the New Zealand economy recent comments from the Reserve Bank of New Zealand have sparked up the market somewhat, as the governor of the RBNZ believes that the NZD has turned a corner and may be starting to retreat. However, the recent Global Dairy Auctions had its 4th consecutive jump in recent weeks and this was further backed by the ANZ commodity price index lifting 2.7% on the previous quarter, adding further fuel to traders seeking safety and yield overseas away from the turmoil.

The NZDUSD has been the major trading target and has so far managed to hold up firmly on support at 0.7113 as it looks to shrug off the bears and recent comments from the RBNZ. Right now it's even reaching outwards resistance at 0.7180 and the market will be looking to see if has the momentum and pace to continue further movements higher on the weaker USD. Despite the movements, the USDs run feels like it may not be over and more Trump economics could certainly see it moving rapidly against all the major and commodity currencies out there.

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By Alex Gurr, Guest Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Fri Dec 09, 2016 4:05 am

by FXTM Official

Forextime.com Daily Market Analysis

Markets throw caution to the wind

Markets have thrown caution to the wind when it comes to movements as of late as once again US equities set the scene with another stellar rise, though not as big as yesterdays. The main catalyst for this move was the US unemployment claims figures which showed a drop on the previous weeks result to 258K (257K exp). While still slightly above the expected figure it shows that the labour market is still very much alive and kicking in the lead up to Trumps swearing as president and that the market is certainly poised to grow if the infrastructure projects that many expect do in fact go ahead. On top of this financials have also been stronger, as many expect Trumps government to likely cut back on financial regulation in areas to help free up capital for further uses. The long term effects of this will be hard to measure but markets are expecting big things.

The S&P 500 had its maiden touch today as it clipped 2250 before retreating as some traders looked to unwind their positions in the market. I had mentioned yesterday that this would be the psychological barrier that traders would look to play off, the question is now where to from here. I would expect to see the S&P to rally higher, but with 2250 now acting as a strong level of support expect to see some ranging unless we get further Trump news, or an update from the FED. Any further falls are likely to touch on support at 2211 and also the 20 day moving average, which has so far been acting as dynamic support for any rises in the market.

For the Aussie dollar it has been another day of pain as it continues to struggle in the market, and is starting to look like it's consolidating against the USD rather than trending. It was not helped at all today by the recent Australian Trade Balance data coming in at-1.54B (-0.71B exp). This is a reflection of the strong Australian dollar when it comes to commodities which have been feeding the trade balance data for some time. The long term effects of the commodity prices being slightly depressed and not rebounding is likely to be felt on the markets as traders look to punish the AUD. Certainly for the Reserve Bank of Australia this will not be appealing and they may look to cut further in the future, but for now it's likely a wait and see game.

For the AUDUSD resistance at 0.7490 has so far held its grounds, and for the most part I expect and anticipate that we could see further falls on the charts given the strong USD, and the poor economic data we continue to see out of Australia. What will be key is the short term bullish trend line on the daily chart, when this breaks it will give the bears clear control and markets are looking ready to pounce on the opportunity. Looking for a strong level of support it can be found easily at 0.7326 and is likely to hold up against a first attempt to break through.

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By Alex Gurr, Guest Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Tue Dec 13, 2016 6:06 am

by FXTM Official

Forextime.com Daily Market Analysis

Chinese data set to move AUD & NZD

It's been a slow start to the global calendar today as the markets were relatively quiet from an economic data perspective but there was some slight selling of the USD across the major pairs which saw the commodity currencies take centre stage. None more so that the NZDUSD which had its housing data report come back showing housing sales down -6.0% (-14.2% prev), while visitor arrivals were also up 2%. This bodes somewhat well for the current state of the NZ economy which has also seen some political change in the last few weeks, and as the economy looks to pick up in the wake of the recent earthquake. But, it's not all doom and gloom over that side of the world and the NZD continues to be a strong currency in the wake of it all, even as the RBNZ made comments last week that the time for the NZD was now to fall.

The NZDUSD has not fallen, in fact today it rallied strongly on the back of USD selling to touch a strong level of resistance at 0.7180 before pausing and failing to maintain any further momentum. The net level above at 0.7222 is looking all the more cautious, but at present further USD selling could propel the kiwi much higher at this rate. Support levels are also keenly watched and none more so than 0.7113, which has held up any further movements lower. Just below this key support level is the 200 day moving average which the NZDUSD has been respecting quite frequently, and I would expect hold back any further bearish movements in the event of a swing lower.

The NZDUSD may have some of the spotlight but it's not hard to look past the AUD as well as Chinese data is due out shortly in the day and as usual it will have a large impact. Traders will be sharply focused around the Industrial Production reading at present, but also the Australian data due out on business confidence with expectations low for a strong reading given the recent turmoil that Australia has endured from an economic perspective.

On the charts the AUDUSD continues to be a mixed bag and looks very similar to the NZDUSD when it comes to patterns. So far resistance around 0.7490 has been quite strong and the market is looking for further direction from the economic events from today before looking to move either higher or lower. I would expect the 100 and 50 day moving average may look to slow traders who are quite bullish, but it's no guarantee when it comes to such important economic data. The 20 day moving average has thus far managed to act as dynamic support I would expect that to remain the case as the USD weakness continues in the marketplace. However, overall the bullish trend is pointing upwards and it may be a matter of time before the AUD looks to take charge again against the USD bulls.

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By Alex Gurr, Guest Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Thu Dec 15, 2016 4:31 am

by FXTM Official

Forextime.com Daily Market Analysis

FED lifts interst rates

The market has been somewhat stunned today as Janet Yellen announced after the FOMC that the FED was raising rates by 25 basis points to 0.75%; this was in line with the market expectation that the FED would finally look to raise rates in December. However, the rate rise is somewhat unexpected in the sense that the FED has been dovish for some time and is starting to look hawkish. The rate rise is in line with the inflation expectations that the FED has also been looking out for 2%, and also in line with the labour market expectations which have continued to improve. With the market now taking on board the rate cut the USD has rise in line with expectations, but the expectations for future rate cuts are likely to diminish given the fact the FED is looking to slow down in the wake of political change to adjust to the new fiscal policy that may be laid out by the Trump presidency.

For the S&P 500 we saw a quick retreat on the charts as a result of the rate rise, and for some time we have been talking up the reality of it happening. Obviously the fall was not massive, but rather a minor adjustment and with the FED actually looking dovish in the near future we could see the bulls still look to take control. So far resistance is likely to be found 2276 and the next level above this at the psychological level of 2300. Any retreat further on the charts is likely to find dynamic support at the 20 day moving average and also at the next major level which can be found at 2246 and 2211, both of which are likely to stifle any bearish movements lower.

One of the biggest losers on the back of the FED movement has been the gold markets which has so far suffered under the higher USD and the fact that many investors now believe with Trump in power we will see a boost to the economy. The reality has been far from satisfactory though, with gold trending down the charts aggressively, and shrugging of any fears of an increase in inflation caused by the spending that many had expected from Trump. It would seem more than ever that gold bugs are doing it tough, and could in fact be in for another round of toughing it out on the markets.

On the charts gold has fallen all the way down to a strong support level at 1141 in an increasingly bearish trend line that looks set to stay. Beyond this key level the next level of support is likely to be found around 1109 and could be an area we see gold look to take a breather. Gold has also previously reacted quite strongly to the 20 day moving average and this could easily come back into play as dynamic resistance in the event that gold swings higher.

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By Alex Gurr, Guest Analyst

Re: Daily Fundamental ForexTime ( FXTM )

Posted: Tue Dec 20, 2016 8:55 am

by FXTM Official

Forextime.com Daily Market Analysis

BoJ holds fire, brightens economic outlook

As widely anticipated the Bank of Japan did not surprise markets by keeping monetary policy unchanged at its final meeting for 2016. The central bank left interest rates unchanged at -0.1% and 10-year JGB’s yield target around zero, while maintain its annual holding of bonds at 80 trillion yen.

The 12% decline in the Yen and 13% surge in crude prices since BoJ last met on November 1, helped in providing a brighter economic outlook as exports and output picked up.

But the extreme divergence of U.S. monetary policy was considered a risk, as series of expected rate hikes in 2017 could see capital flight from emerging economies.

USDJPY rose 0.5% as bond yield spreads between U.S. and Japan are not expected to shrink anytime soon, but we can assume that BoJ’s next step likely to be tightening rather than easing further.

2016 is ending with tragic incidents in Turkey and Germany, but investors have become so fast in digesting bad news, and this explains the resilience in financial markets.

The U.S. dollar is trading in narrow ranges against most of its major peers after Monday’s rally which was supported by Yellen’s public speech in Baltimore University. Although she did not comment on Monetary policy, her views that job market is strong and wage growth picking up was sufficient to provide the greenback a boost.

With only nine trading days remaining till end of year, investors are unlikely to take heavy positions, whether it’s in equity, fixed income or foreign exchange markets, suggesting that the narrow range trading is likely to remain until new year.